By Jonathan Cable, Leika Kihara and Lucia Mutikani
LONDON/TOKYO/WASHINGTON (Reuters) - Factories across Europe, Asia and North America continued to shake off the coronavirus gloom in August as the global economy emerged from a downturn triggered by the health crisis, thanks in part to massive fiscal and monetary stimulus programmes.
Surveys showing an expansion in manufacturing activity may reduce pressure on policymakers to take bolder steps to avert a deeper recession. J.P. Morgan's measure of global manufacturing activity rose to a 21-month high of 51.8 in August from 50.6 in July, the second straight month above the neutral reading of 50.
Many analysts expect the recovery to be choppy, however, as renewed waves of coronavirus infections curb business activity and prevent some nations from fully reopening their economies. Fears of a resurgence in infections in some economies may discourage firms from boosting capital expenditure and delay a sustained rebound, some analysts say.
"We expect that ongoing coronavirus-related headwinds will constrain the manufacturing sector’s recovery to only a modest pace going forward," analysts at Oxford Economics wrote following data showing U.S. factory activity near a two-year high.
"Indeed, the latest Eurozone and Asian PMI manufacturing readings signal the recovery is losing steam, even in countries that did arguably a better job at containing the virus than the U.S."
The Institute for Supply Management's purchasing manager's index for manufacturing rose to 56 this month - the highest since November 2018 - from 54.2 in July, led by the largest level of new orders in more than 16 years. Similarly, Canada's PMI hit a two-year high, IHS Markit reported on Tuesday.
Euro zone manufacturing activity, meanwhile, remained on a recovery path last month, but factory managers were wary about investing and hiring workers as the pandemic rages on.
Manufacturing output, which didn't suffer quite as sharp a decline as the services industry during coronavirus lockdowns, increased for a second straight month.
IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) dipped to 51.7 in August from July's 51.8, in line with an earlier flash reading and comfortably ahead of the 50 mark separating growth from contraction. [EUR/PMIM]
Unemployment in the 19-country euro zone only nudged up to 7.9% in July, official data showed, but consumer prices fell in August, against market expectations of a small increase.
"Some modest good news, the manufacturing sector for now remains a bit of a bright spot. Short-term work schemes across Europe are working so well that unemployment has increased to just 7.9% - without them unemployment would be around 10%," said Bert Colijn at ING.